tHis U.S. Treasury Agree The G7, which has agreed on the world’s lowest tax, does not apply to U.S. companies. The G7 government has suffered a huge pressure from President Donald Trump and lobbying from multinational corporations in Washington, London, Brussels and beyond – like India, now, sadly, Canada’s digital taxes are in trouble.
A few years ago, the international community realized that too many global companies did not pay fair taxes, and some did not pay taxes to countries where economic activity actually occurred. In 2021 OECD/G20 includes framework Including two pillars in terms of basic erosion and profit transfer; only passed the world’s lowest corporate tax pillar. (The tax rights between countries are distributed among other pillars and encourages opposition in developing countries and the United States.)
Despite the global consensus in the absence of such a minimum requirement, Trump adopted a version of Trump’s first presidency, which is different from the rest of the world, allowing multinational corporations to “make up” fees they did not pay in the U.S. or other high tax obligations.
While far from perfect, the second pillar is the first attempt to ensure a minimum tax rate of 15% for multinational corporations across the country, a key step to end harmful tax competition among countries.
Of course, there are some engravings and saving throws, which reduces the efficiency by just under 15%. The interest rate of 15% is already below the interest rate imposed by many developing countries. It should be higher and less engraved. Still, the two deals on the pillars stopped the game to the bottom, so countries offered lower tax rates to attract businesses into their jurisdictions. For the whole world, this game did not generate much new investment. The real winners are wealthy companies who pay savings from almost no taxes from certain countries.
But again G7 The government has decided to place the interests of multinational corporations in the interests of developing countries, small and medium-sized enterprises (which cannot take advantage of the profits that multinational corporations seek) and their own citizens – as a result, they will pay higher taxes. By exempting U.S. multinationals from the second pillar, the deal will allow some to continue to benefit from zero or near zero taxes from profits or tax paradise they book in low-tax jurisdictions, such as Puerto Rico and the Cayman Islands. This will make them more competitive than non-US multinationals. Because modern multinationals are willing to transfer their nominal headquarters to anywhere where they receive the most favorable tax treatment (and other goods), while actual economic activity is conducted elsewhere, this has led to the incentive for U.S. corporate preferential training to companies to move their official headquarters to the United States. Here is another sad example of a competition at the bottom.
By joining the U.S. requirement, G7 transaction risks undermine the implementation of the world’s minimum tax. It also mocked the inclusion of the OECD/G20 inclusion framework.
People pretend that the new global framework is a joint effort by more than 140 countries. To be sure, many developing countries complain that this is an unfair deal for them, and powerful countries are not listening to their concerns. Now, the exterior wall has collapsed. Now only one country requires non-G7 countries, including dozens of emerging markets and developing countries, now requires rubber map zip code to make decisions.
Pillar II should be strengthened, not destroyed. Currently, it only applies to large multinational corporations (global turnover may exceed €750 million), with a very low global minimum tax rate of 15%. this Independent Commission for International Corporate Tax Reform The minimum rate that is always advocated is at least 25%.
According to some estimates, the minimum tax on pillar two will be incurred $1.55 billion and $19.2 billion (£11.2 billion – £140 billion) is annually in additional corporate income tax revenue worldwide. While this is a large quantity, a minimum rate of 25% may result in more than $500 billion per year Additional income. In a world facing inequality, climate change and underfunded public service crises, it is irresponsible to leave such a large amount of resources on the dining table and is morally irresistible.
Pillar 2 represents a starting point – the floor of global corporate taxation that can curb the competition to the bottom and restore a certain level of tax justice. G7 decided to disconnect our multinationals from the hook, even weaken the humble ground and convey the wrong message to the rest of the world.
Just two weeks ago, at the United Nations, there was a global consensus on strengthening international tax cooperation and implementing a progressive tax system, and most countries voted in favor and support the negotiations on the United Nations Framework Convention on International Tax Cooperation. But the U.S. government recently left the UN negotiations, illustrate The objectives of the proposed UN Convention “are inconsistent with our priorities and represent an unwelcome excess.”
In adopting “Seville of Compromise” Result File The United States is the only major country absent this week at the Fourth United Nations Conference on International Development Financing (FFD4). The two rules that allow the United States to bypass the already modest pillars not only undermine multilateralism; it will also fly away in the face of promises made and further deepen the inequality of global tax governance.
Members of the OECD/G20 included framework should refuse transactions reached on G7. The United States shall not be allowed to decide on global policies. It is powerful, but still less than 20% of global GDP.
The countries that meet FFD4 in Seville can accept the United States to undermine all efforts by the United States to ensure that multinational corporations pay a fair share, or create a new international tax system in the United Nations for the new international tax system that is effective for all. For the world economy and people around the world, they should do the latter.
Joseph E Stiglitz He is a Nobel Prize winner in economics, a university professor at Columbia University, and a former chief economist at the World Bank.
José Antonio Ocampo He is a professor at Columbia University and former Minister of Finance of Columbia.
Jayati Ghosh He is a professor of economics at the University of Massachusetts Amherst.
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